SEBI Moves to Rewire India's Securitised Debt Market With RBI in Step

A long-standing regulatory mismatch is finally getting fixed, and the listed securitisation market stands to benefit most

Key Insights

• SEBI released a consultation paper on May 4, 2026, proposing key amendments to its Securitised Debt Instruments (SDI) regulations, including permitting single-asset securitisation for RBI-regulated entities and shifting periodic disclosure responsibilities from originators to servicers.
   
• Previously, SEBI's May 2025 SDI amendment aligned several provisions with the RBI's 2021 Securitisation of Standard Assets (SSA) Directions but gaps remained, particularly the 25% single-obligor concentration cap that RBI does not prescribe.

A Regulatory Gap That Has Quietly Constrained India's Market

The Securities and Exchange Board of India on Monday proposed amendments to norms governing securitised debt instruments to align its framework with the RBI's 2021 directions on securitisation of standard assets. 

The proposals follow feedback highlighting differences between SEBI's regulations and RBI guidelines, particularly for securitisation transactions originated by RBI-regulated entities. 

In short, two regulators had been running overlapping but misaligned rules and that friction had cost the market.

The existing conditions restrict listing of such instruments, though they are permitted under the RBI framework, impacting the development of the listed securitisation market particularly for RBI-regulated entities already subject to prudential supervision by RBI. 

In the short term, removing these barriers increases liquidity for banks and NBFCs. 

Long-term, it could reshape how credit is packaged, priced, and distributed across India's capital markets though any misuse of relaxed oversight remains a risk worth watching.

Key Proposals at a Glance

The table below captures the most significant proposed changes and how they shift the current regulatory landscape.
 

SEBI has stated that the objective is to align its regulations more closely with RBI norms and deepen the listed securitisation market. 

The shift in disclosure responsibility is particularly significant servicers, not originators, are best placed to report on asset pool performance since they directly manage receivables.

What This Means for Investors, NBFCs, and Ordinary Borrowers

The ripple effects of these reforms extend well beyond institutional balance sheets. 

Recent market analysis shows a growing trend among banks, financial institutions, and corporates, including start-ups, opting for SDIs as a financing mode, with evolution beyond traditional NBFC loan receivables to emerging asset classes such as trade and lease rental receivables. 

Wider access to listed securitisation means more credit channels for businesses, which could translate into better loan availability for smaller borrowers.

India's corporate bond market accounts for around 18% of GDP a low share compared to over 100% in the US and approximately 36% in China. 

Expanding the securitisation market is one of the most direct levers to deepen India's debt capital market. 

Retail investors, too, benefit indirectly broader credit markets reduce systemic concentration risk in the banking sector.

Experts: This Is the Structural Reform the Market Has Needed

Legal and financial market experts have responded positively. 

Market participants have noted that for financial sector entities, these amendments introduce no pain points discouraging listing; rather, they reduce friction while retaining prudential safeguards already applied by the RBI. 

That balance deregulating where duplication exists, not where oversight is needed is precisely what the market asked for.

India's total bond market is estimated at around 70% of GDP, significantly below the 225% seen in the US and 260% in Japan. 

To close that gap, India needs more instruments, more issuers, and more secondary market depth. SEBI's proposals directly address all three. 

The consultation paper is open for comment, with final rules expected to follow through H2 2026.

Conclusion

SEBI's proposed SDI amendments mark a considered step toward regulatory maturity. By removing structural conflicts with the RBI framework, India can attract more originators to the listed securitisation market. The deeper the credit market grows, the more efficiently capital reaches every corner of the economy.

FAQs

How do I invest in debt? 

Investing in debt involves lending money to entities (government or corporations) to earn fixed interest income. Key methods include debt mutual funds, corporate bonds, and government securities (G-Secs).

Why is there no plan by the RBI to buy sovereign debt directly, and the government may end up borrowing less than the revised annual estimate?

The RBI avoids directly buying sovereign debt to prevent inflationary money printing, preferring market-based borrowing to manage liquidity.